Given the failure of negotiations to raise the U.S. debt ceiling, the greenback traded flat on Wednesday, staying close to the two-month high reached in the previous session.

The dollar index which gauges the greenback versus its major pairs, steadied at 103.395 close to the highest level in two months at 103.65 touched earlier on Tuesday.

While negotiations between the two political parties over raising the $31.4 trillion debt ceiling for the United States government are still ongoing, no indication exists that a solution will be struck anytime soon.

Several Fed speakers over the last week expressed hawkish views regarding the monetary policy and the rate trajectory, implying that U.S. rates are likely to remain higher for a longer period of time.

EUR/USD advanced by 0.1% to 1.0780 before the largely anticipated German Ifo business climate index for May, which is predicted to reflect a modest decline in confidence in Europe's largest economy, is released.

GBP/USD ticked up by 0.3% to 1.2452, after the U.K. headline CPI declined by less than anticipated to 8.7% in April, the country's economy rebounded from Tuesday's one-month low.

USD/JPY surged to 138.64, post touching six-month peak overnight.